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=U4= Sec488 -- Section 488 Typical contractual duties in a loan contract
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=S=> BGB 488. 1 The loan contract obliges the lender to make available to the borrower a sum of money in the agreed amount . The borrower is obliged to pay interest owed and , at the due date , to repay the loan made available to him .
=S=> BGB 488. 2 The agreed interest , unless otherwise provided , is to be paid at the end of each year and , if the loan is to be repaid before the end of one year , upon repayment .
=S=> BGB 488. 3 If a time is not specified for repayment of the loan , its due date is subject to the lender or the borrower giving notice of termination . The notice period is three months . If interest is not owed , the borrower is also entitled to repay without giving notice of termination .
=U4= Sec489 -- Section 489 Right of the borrower to give notice of termination
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=S=> BGB 489. 1 The borrower may terminate a loan contract , in whole or in part , where for a specific period of time a fixed rate of interest has been agreed if the pegging of the rate of interest ends prior to the time determined for repayment and no new agreement is reached on the rate of interest , observing a notice period of one month to end at the earliest at the end of the day on which the pegging of the rate of interest ends ; if an adjustment of the rate of interest is agreed at certain intervals of up to one year , the borrower may only give notice to end at the end of the day on which the pegging of the rate of interest ends ; if the loan is granted to a consumer and not secured by a security right in land or a maritime lien , at the end of six months after complete receipt , observing a notice period of three months ; in any case at the end of ten years after complete receipt , observing a notice period of six months ; if , after the loan is received , a new agreement is reached on the repayment period or the rate of interest , the date of this agreement replaces the date of disbursement .
=S=> BGB 489. 2 The borrower may terminate a loan contract with a variable rate of interest at any time , giving three months ' notice of termination .
=S=> BGB 489. 3 Termination by the borrower under subsections ( 1 ) or ( 2 ) is deemed not to have been given if the borrower does not repay the sum owed within two weeks after the notice of termination takes effect .
=S=> BGB 489. 4 The right of termination of the borrower under subsections ( 1 ) and ( 2 ) above may not be excluded or made more difficult by contract . This does not apply to loans to the Federal Government , to a special fund of the Federal Government , a Land , a municipality , an association of municipalities , the European Communities or foreign regional or local authorities .
=U4= Sec490 -- Section 490 Right to terminate for cause
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=S=> BGB 490. 1 If there is or threatens to be a substantial deterioration in the financial circumstances of the borrower or in the value of a security given for the loan as a result of which the repayment of the loan is jeopardised even if the security is realised , the lender may give notice of termination of the loan agreement with immediate effect ; in case of doubt , extraordinary notice of termination is available before the loan is paid out , under all circumstances , but , after the loan has been paid out , only as a general rule .
=S=> BGB 490. 2 The borrower may give early notice of termination of a loan contract where for a specified period of time a fixed rate of interest is agreed and the loan is secured by a security right in land or a maritime lien , complying with the notice periods in section 489 ( 1 ) no . 2 , if his justified interests require this . There is such an interest in particular , without limitation , if the borrower has the need to otherwise realise the thing pledged to secure the loan . The borrower must compensate the lender for the damage incurred by the lender as a result of this early termination ( compensation for early termination ) .
=S=> BGB 490. 3 The provisions of sections 313 and 314 are unaffected .
=U4= Sec491 -- Section 491 Consumer loan contract
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=S=> BGB 491. 1 The following provisions apply as supplementary provisions , subject to subsections ( 2 ) and ( 3 ) below , to nongratuitous loan contracts between an entrepreneur as lender and a consumer as borrower ( consumer loan contract ) .
=S=> BGB 491. 2 The following provisions do not apply to consumer loan contracts in which the disbursable loan ( net loan amount ) does not exceed 200 euros , which are entered into between an employer and an employee at rates of interest lying below the going market rates , which , in connection with the subsidisation of housing and urban development , are entered into on the basis of public-law approvals or on the basis of grants from public authorities directly between the public law institution awarding the subsidies and the borrower at rates of interest lying below the going market rates .
=S=> BGB 491. 3 In addition , the following do not apply : section 358 ( 2 ) , ( 4 ) and ( 5 ) and sections 492 to 495 to consumer loan contracts incorporated in a court record drawn up in compliance with the provisions of the Code of Civil Procedure [ Zivilprozessordnung ] or notarially recorded , if the record or the notarial instrument contains the annual rate of interest , the costs invoiced when the contract was entered into , and the conditions under which the annual rate of interest or the costs may be changed ; section 358 ( 2 ) , ( 4 ) and ( 5 ) and section 359 to consumer loan contracts serving the purpose of financing the purchase of securities , foreign currency , derivatives or precious metals .
=U4= Sec492 -- Section 492 Written form , contents of the contract
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=S=> BGB 492. 2 The effective annual rate of interest is the total charge per annum , to be expressed as a percentage of the net loan amount . The effective and the initial effective annual rate of interest are calculated in compliance with section 6 of the Statutory Order on Price Quotation [ Verordnung zur Regelung der Preisangaben ] .
=S=> BGB 492. 3 The lender must supply to the borrower a copy of the contract declarations .
=S=> BGB 492. 4 Subsections ( 1 ) and ( 2 ) also apply to a power of attorney granted by a borrower to enable the attorney to enter into a consumer loan contract . Sentence 1 does not apply to a power of attorney for legal proceedings and a power of attorney notarially recorded .
=U4= Sec492a -- Section 492a Duties to notify during the contractual relationship
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=S=> BGB 492a. 1 If a fixed interest rate is agreed in the loan contract , and if the fixing of interest ends prior to the time determined for repayment , the lender shall inform the borrower at the latest three months prior to the end of the fixing of interest whether he is willing to reach a new agreement as regards interest . If the lender declares his willingness thereto , notification must contain the interest rate offered by the lender at the time of notification .
=S=> BGB 492a. 2 The lender must notify the borrower at the latest three months prior to termination of a loan contract whether he is willing to continue the loan relationship . If the lender declares that he is willing to continue , notification must contain the obligatory information from section 492 ( 1 ) sentence 5 applicable at the time of notification .
=S=> BGB 492a. 3 If claims were assigned from the loan contract , the obligations in accordance with subsections ( 1 ) and ( 2 ) also affect the new creditor unless the previous creditor has agreed with the new creditor that only the previous lender is identified in the relationship with the borrower .
=U4= Sec493 -- Section 493 Overdraft credit
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=S=> BGB 493. 1 The provisions of section 492 do not apply to consumer loan contracts in which a banking institution gives a borrower the right to overdraw his current account by a specified amount , if , apart from interest , no other charges are made for the loan taken out and the interest is not charged in periods shorter than three months . The banking institution must advise the borrower prior to such a loan being drawn on of the maximum limit of the loan , the annual rate of interest applicable at the time of the advice , the terms on which the rate of interest can be changed , the provisions for termination of the contract . The contract terms referred to in sentence 2 nos . 1 to 4 must be confirmed in writing to the borrower at the latest after the borrower has drawn on the loan for the first time . During the period in which he is drawing on the loan the borrower must also be given notice of any change in the annual rate of interest . The confirmation under sentence 3 and the notice under sentence 4 must be made in text form ; it is sufficient if they are given on a bank statement .
=S=> BGB 493. 2 If the banking institution allows a current account to be overdrawn and if the account is overdrawn for more than three months , then the banking institution must inform the borrower of the annual rate of interest , the charges and any changes in this connection ; this may be in the form of a printout on a bank statement .
=U4= Sec494 -- Section 494 Legal consequences of defects of form
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=S=> BGB 494. 1 The consumer loan contract and the power of attorney given by the consumer to enter into such a contract are void if written form is not complied with at all or if any of the items of information specified in section 492 ( 1 ) sentence 5 nos . 1 to 6 is lacking .
=S=> BGB 494. 2 Irrespective of a defect under subsection ( 1 ) , the consumer loan contract is valid to the extent that the borrower receives the loan or draws on it . However , the rate of interest agreed for the consumer loan contract ( section 492 ( 1 ) sentence 5 no . 4 ) is reduced to the statutory rate of interest if there is no information on the rate of interest itself , on the effective annual rate of interest or on the initial effective annual rate of interest ( section 492 ( 1 ) sentence 5 no . 5 ) , or if there is no information on the total amount ( section 492 ( 1 ) sentence 5 no . 2 , ( 1a ) . The borrower has no liability to pay any charges not stated . Agreed instalments must be recalculated , taking account of the reduced rate of interest or charges . If there is no information on the conditions under which the factors that determine the price may be changed , they may not be changed to the disadvantage of the borrower . If there is no information on security , it may not be called for ; this does not apply if the net loan amount exceeds 50,000 euros .
=S=> BGB 494. 3 If the effective or the initial effective rate of interest is stated at a rate that is too low , the rate of interest on which the consumer loan contract is based is reduced by the percentage by which the effective or initial effective rate of interest is too low .
=U4= Sec495 -- Section 495 Right of revocation
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=S=> BGB 495. 1 In the case of a consumer loan contract , the borrower has a right of revocation under section 355.
=S=> BGB 495. 2 Subsection ( 1 ) does not apply to the consumer loan contracts referred to in section 493 ( 1 ) sentence 1 if , under the contract , the borrower may repay the loan at any time without complying with a notice period and without additional charges .
=U4= Sec496 -- Section 496 Waiver of objections , prohibition of bills of exchange and cheques
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=S=> BGB 496. 1 An agreement by which the borrower waives his right under section 404 to make against an assignee of the obligation objections to which he is entitled against the lender , or his right under section 406 to set off against an assignee of the obligation too a claim he has against the lender , is ineffective .
=S=> BGB 496. 2 If a claim of the lender from a loan contract is assigned to a third party , or if the identity of the lender is changed , the borrower must be notified of this without delay , as well as of the contact data of the new creditor in accordance with section 1 ( 1 ) Nos . 1 to 3 of the Civil Law Ordinance on Duties to Provide Information [ BGB-Informationspflichten-Verordnung ] . Notification shall be dispensable with assignments if the previous lender has agreed with the new creditor that only the previous lender is identified in the relationship with the borrower . If the preconditions of sentence 2 continue , notification must be subsequently carried out .
=S=> BGB 496. 3 The borrower may not be obliged to incur a bill of exchange commitment for the claims of the lender under the consumer loan contract . The lender may not accept a cheque from the borrower to secure his claims under the consumer loan contract . The borrower may require the lender at any time to return a bill of exchange or cheque that has been issued in violation of sentence 1 or 2 above . The lender is liable for all damage incurred by the borrower as a result of the issue of such a bill of exchange or cheque .
=U4= Sec497 -- Section 497 Treatment of default interest , crediting part performance
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=S=> BGB 497. 1 To the extent that the borrower is in default in making payments owed on the basis of the consumer loan contract he must pay interest under section 288 ( 1 ) on the amount owed ; this does not apply to real estate loan contracts . With regard to these contracts , the default rate of interest per year amounts to two and a half percentage points above the base rate of interest . In an individual case , the lender may prove that the damage was greater or the borrower may prove that the damage was less .
=S=> BGB 497. 2 Interest incurred after default has occurred must be booked to a separate account and may not be paid into a current account together with the amount owed or other claims of the lender . In regard to such interest , section 289 sentence 2 applies , with the proviso that the lender may only demand damages up to the amount of the statutory rate of interest ( section 246 ) .
=S=> BGB 497. 3 Payments by the borrower which are insufficient to repay the entire debt due are credited , notwithstanding section 367 ( 1 ) , first , towards costs of litigation , then towards the remainder of the amount owed ( subsection 1 ) and finally towards interest ( subsection 2 ) . The lender may not reject instalments . Limitation of the claims for repayment of the loan and interest is suspended from the date when default begins under subsection ( 1 ) until they are determined in a manner described in section 197 ( 1 ) nos . 3 to 5 , but not for more than ten years from the date when they come into existence . Section 197 ( 2 ) does not apply to claims for interest . Sentences 1 to 4 do not apply to the extent that payments are made in response to judicially enforceable instruments whose main claim is for interest .
=S=> BGB 497. 4 Subsections ( 2 ) and ( 3 ) sentences 1 , 2 , 4 and 5 do not apply to real estate loan contracts .
=U4= Sec498 -- Section 498 Calling in entire loan in the case of loans repayable in instalments
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=S=> BGB 498. 1 With regard to a loan that is to be repaid in instalments , the lender may only give notice of termination on account of the default in payment of the borrower if the borrower is in default in the payment of at least two consecutive instalments in whole or in part and by at least ten per cent , in the case of a consumer loan contract running for more than three years by five per cent , of the nominal amount of the loan or of the instalment price , and the lender has without result given the borrower a period of two weeks for payment of the amount in arrears and has declared that in the case of failure to pay within the period , the lender will demand the entire residual debt . At the latest when the lender specifies a period of time , the lender is to offer to the borrower to discuss the possibility of an arrangement by mutual consent .
=S=> BGB 498. 2 If the lender terminates the consumer loan contract , the residual debt is reduced by the interest and other charges dependent on the duration of the loan which , if graduated calculation is used , apply to the period after the termination becomes effective .
=S=> BGB 498. 3 Subsection ( 1 ) applies to real estate loan contracts on proviso that the borrower must be completely or partly in arrears in respect of at least two consecutive instalments and of at least 2. 5 percent of the nominal amount of the loan .
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